Customize your car insurance policy to cover your vehicle's custom parts

Written by Gary Bangstad and Andrew Freiburghouse on October 17, 2011 & Posted in Auto Insurance

Buying a new car is exciting. But changing out parts for new custom features like a beefed-up suspension package or installing creature comforts like a DVD player can really make the car something you're proud to own.

In your hurry to personalize your car, don't forget that changing out equipment and adding in new luxury parts can affect your car insurance coverage.

What does customizing a car mean?

Your average car insurance policy won't cover custom items, which are basically defined by insurers as permanently installed parts or equipment not installed by the original manufacturer.

Auto insurance companies also consider dealer-installed equipment that wasn't offered by the original manufacturer to be custom. Changing out your radio for a different audio system, buying aftermarket rims or even getting a special paint job could keep you from making a claim for these items on your car insurance policy.

How do you cover custom parts?

Auto insurance companies offer custom parts and equipment (CPE) coverage that protects equipment you purchase or add to the car that enhances or changes the performance or appearance of your vehicle.

CPE coverage differs from one insurer to the next. Some insurers have a limit to the CPE payout (such as $5,000). Others offer coverage that reimburses you the actual cash value, declared value or the cost of repair.

The type of parts covered by custom parts and equipment coverage vary by the terms of the policy. But typically, covered items include:

  • Custom tires and rims.
  • Spoilers, suspension or performance equipment.
  • Aftermarket seats.
  • Custom paint or decals.
  • Stereo and audio equipment, and television or DVD (if permanently installed).
  • Special equipment placed on the vehicles, such as running boards, roll bars, lighting, truck bed liners, camper shells and trailer hitches.

There is a cost for this added protection. In addition, you must already carry collision and comprehensive coverage to add CPE to your auto insurance policy.

About the Author

Gary P. Bangstad, Ed. D. is a freelance writer in the area of business and insurance. Previously, he worked for Midwest Financial Planning LTD, selling insurance and investment products. He has also taught music at the university level.

Andrew Freiburghouse is a writer and businessman. As a partner at Los Angeles tax preparation firm Pronto Income Tax of California, Inc., Andrew has served thousands of clients both face to face and over the telephone. Currently, Andrew lives in Brooklyn, NY, and is in the process of starting up his own tax practice.

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